Financing a Car Loan When Self Employed

If you're self-employed in Ontario and need a vehicle, you may be wondering if it's possible to get a car loan. The good news is yes—you can get a car loan when self-employed, even if your income is not the same each month.

 

Used car dealerships in Ontario work with lenders who understand that many Canadians run their own businesses or work freelance.

 

 

How Self-Employe Car Loans Work

Getting a car loan while self-employed is similar to getting one with a regular job, but there are a few extra steps. Lenders just need to see that you earn a steady enough income to make your car payments on time.

 

At a used car dealership in Canada, you’ll sit down with a finance expert who will help collect the documents you need. Then, your application is sent to lenders who decide if you qualify for the loan.

 

What Lenders Look For

When you're applying for a car loan when self employed, lenders will usually ask for proof of the following:

 

• Income: This is the most important. Because you're not receiving a pay stub like a regular employee, lenders want to see your income through other documents.

 

• Tax Returns: Most lenders will ask for the past 2 years of Notice of Assessment from the CRA. This helps them understand how much money you actually earned after expenses.

 

• Bank Statements: Some lenders may also want to see 3–6 months of bank statements to confirm you have a consistent cash flow.

 

• Business Information: If you run your own company, you might be asked to show your business license, website, or client invoices to show you're active and working.

 

How to Improve Your Chances

If you’re applying for a car loan when self employed, you can boost your chances of approval by doing the following:

 

• Have a Good Credit Score: A better credit score helps lenders trust that you’ll make your payments.

 

• Make a Bigger Down Payment: The more you put down, the less you need to borrow. This can make lenders more comfortable giving you a loan.

 

• Show Strong Income: Make sure your tax returns and bank statements are clear and up to date. If you can show steady income—even if it changes a bit month to month—that’s usually enough.

 

• Bring a Co-Signer (if needed): If your income is low or credit score is poor, a co-signer can help strengthen your application.

 

Financing Through a Used Car Dealership

Used car dealerships in Ontario often work with many lenders, including ones who understand the unique situation of self-employed people. These dealerships can help you:

 

• Understand which documents are needed
• Work with lenders who approve self-employed applications
• Choose a vehicle that fits your budget and income
• Apply easily, often with quick responses

 

Even if your income changes from month to month, that doesn’t mean you’ll be turned down. Many lenders just want to see that you earn enough on average to cover your payments.

 

Common Questions

Can I get approved if I just started my business?

 

If your business is brand new, approval can be harder. Most lenders want to see at least 1–2 years of income. However, some dealerships may still be able to find options for you—especially if you have a strong down payment or co-signer.

 

Do I pay higher interest?

Sometimes. If lenders feel there's more risk, your rate might be higher. But with strong income and credit, you can still qualify for competitive rates.

 

If you’re ready to get started, speak to a local dealership that has experience working with self-employed buyers. You don’t have to figure it out alone.